In a major step towards opening its press and publishing market, China has for the first time awarded exclusive rights to sell and distribute publications to a private company.

The action, which tears down the traditional barriers that awarded such contracts only to State-owned institutions, took place on Friday.

WDGY (Wende Guangyun) Media Distribution Group, a Guangzhou-based advertising and publications distribution firm awarded the deal, made the announcement over the weekend.

Before, only a few large state-owned enterprises like the national postal system had such privileges.

It follows a September 1 action by the General Administration of Press and Publication enacting a bellwether regulation to open up the huge Chinese publications market.

In effect, the new regulation removes restrictions on sources of funds and opens up the general distribution rights to privately funded companies, while raising funding requirements on distribution companies applying for such rights.

According to the regulation, a company, no matter whether State-owned or non-State, needs to have registered capital of more than 20 million yuan (US$2.4 million) and business space of at least 1,000 square meters.

"The new regulation has changed the old distribution system born in the planned economy period, and smashed the monopoly and provided an environment for fair competition," said Liu Binjie, the administration's deputy director on Friday.

He noted the action is a sign of a gradual opening of the publications market and a deepening reform of the Chinese press.

"Five years from now, China's publishing market will be totally open to the world, with no limits on capital or proportion of funds," he stressed.

China promised to allow foreign distribution companies into the field of publications distribution by December 2004.

"The current distribution network, including the postal system and distribution departments of each newspaper and magazine, has not formed a competitive, orderly market in the distribution business," said Liu.

Insiders said the move is designed to attract more powerful entities to participate in the competitive publications market, helping develop a mainland distribution industry, and thus to be better prepared for the impact from foreign publishers entering the arena next year.

WDGY, with a registered capital of 50 million yuan (US$6 million), has three local distribution networks in the areas of Beijing and Tianjin, Guangzhou, and northwest China.

The group has set up 29 branch centers around the country and aims to build an efficient distribution network that can cover 29 large and middle-scale cities, along with more than 200 smaller cities.

(China Daily September 22, 2003)